Question

In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as1. the present value of minimum lease payments.2. the total book value of the asset less any accumulated depreciation recorded by the lessor prior to the lease agreement.3. the difference between the lease payments receivable and the fair value of the leased property.4. the amount of funds the lessor has tied up in the asset which is the subject of the direct-financing lease.

Answer 1

3. the difference between the lease payments receivable and the fair value of the leased property.

Step-by-step explanation:

The lessor should remove the book value of the asset from its balance sheets and replace it with the amount that he will receive. To do this, the lease receivable in a direct-financed lease is best defined as the differences between the receivable lease payments less the book value of the asset when it was sold.